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ICBA Praises Pension Law at Presidential Signing Ceremony

Americans Now Have Improved Savings Incentives
ICBA Victory on Key Savings Reforms

Washington, D.C. (August 17, 2006)—Independent Community Bankers of America (ICBA) praised the new Pension Protection Act (H.R. 4), signed into law by President Bush, for including many pro-savings provisions.

"The nation's community banks are pleased that the Pension Act contains key savings provisions that offer incentives for individuals to save more easily and boost retirement and education savings," said Camden R. Fine, ICBA president and CEO who attended the White House bill signing ceremony today. "ICBA is proud to fight for the successful enactment of these beneficial savings enhancements. It's no secret that too many Americans are not saving enough for life's events like educational needs and retirement. ICBA fought to promote the savings provisions contained in H.R. 4, and fortunately, this new pension law allows more Americans to better prepare."

As part of the Savings Coalition, ICBA fought hard over the years to help boost the low U.S. savings rate by crafting and advancing measures to beef up popular tax-advantaged savings accounts such as IRAs, 401(k)-type plans and education savings accounts. Savings enhancements in the new law include:

  • Permanently extends higher contributions for 401(k), IRA and Roth IRA plans and allows banks more flexibility in advising their customers. Contribution amounts are also indexed to inflation.

  • Makes permanent catch-up contributions for individuals age 50 or older and indexes them for inflation.

  • Makes permanent the Roth 401(k). The Roth 401(k) allows workers to designate all or part their 401(k) contribution to a Roth IRA which allows tax-free withdrawals in retirement.

  • Allows employers to automatically enroll employees in 401(k) accounts with opt out alternative.

  • Makes it easier to move retirement savings between various savings plans.

  • Makes permanent tax advantages of popular higher education savings accounts known as "529 plans," that accrue tax-free and can be withdrawn tax-free for education purposes.

  • Makes permanent the beneficial saver's tax credit incentive for lower income taxpayers.

  • Allows a tax-beneficial basis adjustment for donated S corporation stock.